TEXTAINER CAPITAL CORPORATION
650 California Street, 16th Floor
San Francisco, CA 94108
March 28, 2002
Securities and Exchange Commission
Washington, DC 20549
Ladies & Gentlemen:
Pursuant to the requirements of the Securities Exchange Act of 1934, we are
submitting herewith for filing on behalf of Textainer Equipment Income Fund V,
L.P. (the "Partnership") the Partnership's Annual Report on Form 10-K for the
fiscal year ended December 31, 2001.
The financial statements included in the enclosed Annual Report on Form 10-K do
not reflect a change from the preceding year in any accounting principles or
practices, or in the method of applying any such principles or practices.
This filing is being effected by direct transmission to the Commission's EDGAR
System.
Sincerely,
Nadine Forsman
Controller
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001
Commission file number 0-25946
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
---------------------------------------
(Exact name of Registrant as specified in its charter)
California 93-1122553
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
650 California Street, 16th Floor
San Francisco, CA 94108
(Address of Principal Executive Offices) (ZIP Code)
(415) 434-0551
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
LIMITED PARTNERSHIP INTERESTS
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
[ X ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
[ X ]
State the aggregate market value of the voting stock held by nonaffiliates of
the Registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and ask prices of such
stock, as of a specified date within 60 days prior to the date of the filing.
Not Applicable.
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Documents Incorporated by Reference
The Registrant's Prospectus as contained in Pre-Effective Amendment No. 3 to the
Registrant's Registration Statement, as filed with the Commission on April 8,
1994, as supplemented by Post-Effective Amendment No. 2 as filed under Section
8(c) of the Securities Act of 1933 on May 5, 1995 and as supplemented by
Supplement No. 5 as filed under Rule 424(b) of the Securities Act of 1933 on
March 18, 1996.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
For more detailed information about the Registrant's business, see "Business of
the Partnership" in the Registrant's Prospectus as supplemented.
(a) General Development of Business
The Registrant is a California Limited Partnership formed on July
15, 1993 to purchase, own, operate, lease, and sell equipment
used in the containerized cargo shipping industry. The Registrant
commenced offering units representing limited partnership
interests (Units) to the public on May 1, 1994 in accordance with
its Registration Statement and ceased to offer such Units as of
April 29, 1996. The Registrant raised a total of $89,305,260 from
the offering and invested a substantial portion of the money
raised in equipment. The Registrant has since engaged in leasing
this and other equipment in the international shipping industry.
See Item 10 herein for a description of the Registrant's General
Partners. See Item 7 herein for a description of current market
conditions affecting the Registrant's business.
(b) Financial Information About Industry Segments
Inapplicable.
(c) Narrative Description of Business
(c)(1)(i) A container leasing company generally, and the Registrant
specifically, is an operating business comparable to a
rental car business. A customer can lease a car from a bank
leasing department for a monthly charge which represents the cost
of the car, plus interest, amortized over the term of the lease;
or the customer can rent the same car from a rental car company
at a much higher daily lease rate. The customer is willing to pay
the higher daily rate for the convenience and value-added
features provided by the rental car company, the most important
of which is the ability to pick up the car where it is most
convenient, use it for the desired period of time, and then drop
it off at a location convenient to the customer. Rental car
companies compete with one another on the basis of lease rates,
availability of cars, and the provision of additional services.
They generate revenues by maintaining the highest lease rates and
the highest utilization factors that market conditions will
allow, and by augmenting this income with proceeds from sales of
insurance, drop-off fees, and other special charges. A large
percentage of lease revenues earned by car rental companies are
generated under corporate rate agreements wherein, for a stated
period of time, employees of a participating corporation can rent
cars at specific terms, conditions and rental rates.
Container leasing companies and the Registrant operate in a
similar manner by owning a worldwide fleet of new and used
transportation containers and leasing these containers to
international shipping companies hauling various types of goods
among numerous trade routes. All lessees pay a daily rental rate
and in certain markets may pay special handling fees and/or
drop-off charges. In addition to these fees and charges, a lessee
must either provide physical damage and liability insurance or
purchase a damage waiver from the Registrant, in which case the
Registrant agrees to pay the cost of repairing certain physical
damage to containers. Container leasing companies compete with
one another on the basis of lease rates, fees charged, services
provided and availability of equipment. To ensure the
availability of equipment to its customers, container leasing
companies and the Registrant may pay to reposition containers
from low demand locations to higher demand locations. By
maintaining the highest lease rates and the highest equipment
utilization factors allowed by market conditions, the Registrant
attempts to generate revenue and profit.
The majority of the Registrant's equipment is leased under master
leases, which are comparable to the corporate rate agreements
used by rental car companies. The master leases provide that the
lessee, for a specified period of time, may rent containers at
specific terms, conditions and rental rates. Although the terms
of the master lease governing each container under lease do not
vary, the number of containers in use can vary from time to time
within the term of the master lease. The terms and conditions of
the master lease provide that the lessee pays a daily rental rate
for the entire time the container is in his possession (whether
or not he is actively using it), is responsible for any damage,
and must insure the container against liabilities. Some of the
Partnership's equipment is leased under long-term lease
agreements. Unlike master lease agreements, long-term lease
agreements provide for containers to be leased for periods of
between three to five years. Such leases are generally cancelable
with a penalty at the end of each twelve-month period. Under
direct finance leases, the containers are usually leased from the
Partnership for the remainder of the container's useful life with
a purchase option at the end of the lease term. Direct finance
leases currently cover a minority of the Partnership's equipment.
For a more detailed discussion of the leases for the Registrant's
equipment, see "Leasing Policy" under "Business of the
Partnership" in the Registrant's Prospectus as supplemented. The
Registrant also sells containers in the course of its business as
opportunities arise, at the end of the container's useful life or
if market and economic considerations indicate that a sale would
be beneficial. See Item 7 herein and "Business of the
Partnership" in Registrant's Prospectus, as supplemented.
(c)(1)(ii) Inapplicable.
(c)(1)(iii) Inapplicable.
(c)(1)(iv) Inapplicable.
(c)(1)(v) Inapplicable.
(c)(1)(vi) Inapplicable.
(c)(1)(vii) No single lessee generated lease revenue for the years ended
December 31, 2001, 2000, and 1999 which was 10% or more of
the total revenue of the Registrant.
(c)(1)(viii) Inapplicable.
(c)(1)(ix) Inapplicable.
(c)(1)(x) There are approximately 80 container leasing companies of which
the top ten control approximately 88% of the total equipment
held by all container leasing companies. The top two
container leasing companies combined control approximately 31% of
the total equipment held by all container leasing companies.
Textainer Equipment Management Limited, an Associate General
Partner of the Registrant and the manager of its marine container
equipment, is the third largest container leasing company and
manages approximately 13% of the equipment held by all container
leasing companies. The customers for leased containers are
primarily international shipping lines. The Registrant alone is
not a material participant in the worldwide container leasing
market. The principal methods of competition are price,
availability and the provision of worldwide service to the
international shipping community. Competition in the container
leasing market has increased over the past few years. Since 1996,
shipping alliances and other operational consolidations among
shipping lines have allowed shipping lines to begin operating
with fewer containers, thereby decreasing the demand for leased
containers and allowing lessees to gain concessions from lessors
about price, special charges or credits and, in certain markets,
the age specification of the containers rented. Furthermore,
primarily as a result of lower new container prices and low
interest rates, shipping lines now own, rather than lease, a
higher percentage of containers. The decrease in demand from
shipping lines, along with the entry of new leasing company
competitors offering low container rental rates, has increased
competition among container lessors such as the Registrant.
(c)(1)(xi) Inapplicable.
(c)(1)(xii) Inapplicable.
(c)(1)(xiii) The Registrant has no employees. Textainer Capital Corporation
(TCC), the Managing General Partner of the Registrant,
is responsible for the overall management of the
business of the Registrant and at December 31, 2001 had 4
employees. Textainer Equipment Management Limited (TEM), an
Associate General Partner, is responsible for the management of
the leasing operations of the Registrant and at December 31, 2001
had a total of 157 employees.
(d) Financial Information about Foreign and Domestic Operations and
Export Sales.
The Registrant is involved in the leasing of shipping containers
to international shipping companies for use in world trade and
approximately 11%, 13% and 14% of the Registrant's rental revenue
during the years ended December 31, 2001, 2000 and 1999,
respectively, was derived from operations sourced or terminated
domestically. These percentages do not reflect the proportion of
the Partnership's income from operations generated domestically
or in domestic waterways. Substantially all of the Partnership's
income from operations is derived from assets employed in foreign
operations. See "Business of the Partnership", in the
Registrant's Prospectus, as supplemented and for a discussion of
the risks of leasing containers for use in world trade, see "Risk
Factors and Forward-Looking Statements" in Item 7 herein.
ITEM 2. PROPERTIES
As of December 31, 2001, the Registrant owned the following types and quantities
of equipment:
20-foot standard dry freight containers 10,038
40-foot standard dry freight containers 10,192
40-foot high cube dry freight containers 4,655
------
24,885
======
During December 2001, approximately 56% of these containers were on lease to
international shipping companies, and the balance were being stored primarily at
a large number of storage depots located worldwide. The Partnership sells
containers when (i) a container reaches the end of its useful life or (ii) an
analysis indicates that the sale is warranted based on existing market
conditions and the container's age, location and condition.
For information about the Registrant's property, see "Business of the
Partnership" and "Risk Factors" in the Registrant's Prospectus, as supplemented.
See also Item 7, "Results of Operations" regarding possible future write-downs
of some of the Registrant's property.
ITEM 3. LEGAL PROCEEDINGS
The Registrant is not subject to any legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
Inapplicable.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
ITEM 201:
(a) Market Information.
(a)(1)(i) The Registrant's limited partnership Units are not publicly
traded and there is no established trading market for
such Units. The Registrant has a program whereby limited
partners may redeem Units for a specified redemption price.
The program operates only when the Managing General Partner
determines, among other matters, that payment for redeemed
units will not impair the capital or operations of the
Registrant.
(a)(1)(ii) Inapplicable.
(a)(1)(iii) Inapplicable.
(a)(1)(iv) Inapplicable.
(a)(1)(v) Inapplicable.
(a)(2) Inapplicable.
(b) Holders.
(b)(1) As of January 1, 2002, there were 4,770 holders of record
of limited partnership interests in the Registrant.
(b)(2) Inapplicable.
(c) Dividends.
Inapplicable.
At December 31, 2001, the Registrant was paying distributions at an annualized
rate equal to 5% of a Unit's initial cost, or $1.00 per Unit. For information
about the amount of distributions paid during the five most recent fiscal years,
see Item 6, "Selected Financial Data." Distributions are made monthly by the
Registrant to its limited partners.
ITEM 701: Inapplicable.
ITEM 6. SELECTED FINANCIAL DATA
(Amounts in thousands except for per unit amounts)
Years Ended December 31,
---------------------------------------------------------------------
2001 2000 1999 1998 1997
---- ---- ---- ---- ----
Rental income........................... $ 10,169 $ 12,584 $ 12,031 $ 14,265 $ 14,012
Income from operations.................. $ 37 $ 3,143 $ 1,100 $ 3,653 $ 3,927
Net earnings............................ $ 108 $ 3,278 $ 1,171 $ 3,697 $ 3,961
Net earnings per unit of
limited partner interest.............. $ 0.01 $ 0.72 $ 0.25 $ 0.81 $ 0.86
Distributions per unit of
limited partner interest.............. $ 1.23 $ 1.40 $ 1.45 $ 1.72 $ 1.87
Distributions per unit of limited
partner interest representing
return of capital.................... $ 1.22 $ 0.68 $ 1.20 $ 0.91 $ 1.01
Total assets............................ $ 51,721 $ 57,638 $ 60,224 $ 65,390 $ 69,623
Intercompany borrowings for
container purchases.................. $ - $ - $ - $ - $ 318
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
(Amounts in thousands except for unit and per unit amounts)
The Financial Statements contain information which will assist in evaluating the
financial condition of the Partnership for the years ended December 31, 2001,
2000 and 1999. Please refer to the Financial Statements and Notes thereto in
connection with the following discussion.
Textainer Capital Corporation (TCC) is the Managing General Partner of the
Partnership. Textainer Equipment Management Limited (TEM) and Textainer Limited
(TL) are Associate General Partners of the Partnership. The General Partners
manage and control the affairs of the Partnership.
Liquidity and Capital Resources
From May 1, 1994 until April 29, 1996, the Partnership offered limited
partnership interests to the public. The Partnership received its minimum
subscription amount of $5,000 on August 23, 1994 and on April 29, 1996 the
Partnership's offering of limited partnership interests was closed at $89,305.
The Partnership invests working capital, cash flow from operations prior to its
distribution to the partners and proceeds from container sales that have not
been used to purchase containers in short-term, liquid investments. Rental
income is the Partnership's principal source of liquidity and provides a major
source of funds for distributions. Rental income has been adversely affected by
current market conditions for leased containers, and these market conditions may
continue or worsen. Market conditions are discussed more fully in "Results of
Operations." The Partnership's cash is affected by cash provided by or used in
operating, investing and financing activities. These activities are discussed in
detail below.
Limited partners are currently receiving monthly distributions in an annualized
amount equal to 5% of their original investment. During the year ended December
31, 2001, the Partnership declared cash distributions to limited partners
pertaining to the period from December 2000 through November 2001, in the amount
of $5,492. On a cash basis, all of these distributions were from current year
operating activities. On a financial statement basis, these distributions were a
return of capital.
From time to time, the Partnership redeems units from limited partners for a
specified redemption value, which is set by formula. Up to 2% of the
Partnership's outstanding units may be redeemed each year, although the 2% limit
may be exceeded at the Managing General Partner's discretion. All redemptions
are subject to the Managing General Partner's good faith determination that
payment for the redeemed units will not (i) cause the Partnership to be taxed as
a corporation, (ii) impair the capital or operations of the Partnership, or
(iii) impair the ability of the Partnership to pay distributions in accordance
with its distribution policy. During the year ended December 31, 2001, the
Partnership redeemed 5,500 units for a total dollar amount of $55. The
Partnership used cash flow from operations to pay for the redeemed units.
At December 31, 2001, the Partnership had no commitments to purchase containers.
Net cash provided by operating activities for the years ended December 31, 2001
and 2000 was $5,875 and $8,547, respectively. The decrease of $2,672, or 31%,
was primarily attributable to the decrease in net earnings, adjusted for
non-cash transactions, offset by fluctuations in gross accounts receivable and
due from affiliates, net. Net earnings, adjusted for non-cash transactions,
decreased primarily due to the decrease in rental income and the increase in
direct container expenses. These items are discussed more fully in "Results of
Operations". Gross accounts receivable decreased $734 during the year ended
December 31, 2001, primarily due to the decrease in rental income. The decrease
in gross accounts receivable of $610 during the year ended December 31, 2000,
was primarily due to the decrease in the average collection period of accounts
receivable. The fluctuations in due from affiliates, net resulted from timing
differences in the payment of expenses, fees and distributions and the
remittance of net rental revenues and sales proceeds, as well as in fluctuations
in these amounts.
For the years ended December 31, 2001 and 2000, net cash used in investing
activities (the purchase and sale of containers) was $1,167 and $1,686,
respectively. The decrease of $519 was primarily due to the decrease in cash
used for container purchases. Cash used for container purchases decreased due to
the Partnership purchasing fewer containers at a lower average purchase price.
This decrease was partially offset by timing differences in the accrual and
payment of these purchases. Proceeds from container sales were comparable
between the periods as the number of containers sold and the sales price
received on container sales were comparable for both periods; however, these
sales proceeds are lower than sales proceeds received in previous years as a
result of current market conditions, which have adversely affected the value of
used containers. Until market conditions improve in certain low demand
locations, the Partnership plans to continue selling some of its containers that
are off-lease in these locations. The number of containers sold, both in low
demand locations and elsewhere, as well as the average sales prices, will affect
how much the Partnership can reinvest in new containers.
Consistent with its investment objectives and subject to its distribution
policy, the Partnership intends to continue to reinvest both cash from
operations available for reinvestment and all, or a significant amount of, the
proceeds from container sales in additional containers. Cash from operations
available for reinvestment is generally equal to cash provided by operating
activities, less distributions and redemptions paid, which are subject to the
General Partners' authority to set these amounts (and modify reserves and
working capital), as provided in the Partnership Agreement. The amount of sales
proceeds will fluctuate based on the number of containers sold and the sales
price received. The Partnership sells containers when (i) a container reaches
the end of its useful life or (ii) an analysis indicates that the sale is
warranted based on existing market conditions and the container's age, location
and condition.
Both cash from operations available for reinvestment and sales proceeds have
been adversely affected by market conditions. These market conditions have
resulted in a slower than anticipated rate of reinvestment. Market conditions
are discussed more fully under "Results of Operations." A slower rate of
reinvestment will, over time, affect the size of the Partnership's container
fleet. Furthermore, even with reinvestment, the Partnership is not likely to be
able to replace all the containers it sells, since new container prices are
usually higher than the average sales price for a used container, and the
majority of cash available for reinvestment is from sales proceeds.
Results of Operations
The Partnership's income from operations, which consists primarily of rental
income less costs and expenses (including container depreciation, direct
container expenses, management fees, and reimbursement of administrative
expenses) was directly related to the size of the container fleet during the
years ended December 31, 2001, 2000 and 1999, as well as certain other factors
as discussed below. The following is a summary of the container fleet (in units)
available for lease during those periods:
2001 2000 1999
---- ---- ----
Beginning container fleet.......... 24,532 23,810 24,165
Ending container fleet............. 24,885 24,532 23,810
Average container fleet............ 24,709 24,171 23,988
As noted above, when containers are sold in the future, sales proceeds are not
likely to be sufficient to replace all of the containers sold, which is likely
to result in a trend toward a smaller average container fleet. Other factors
related to this trend are discussed above in "Liquidity and Capital Resources".
Rental income and direct container expenses are also affected by the average
utilization of the container fleet, which was 64%, 82% and 76% during the years
ended December 31, 2001, 2000 and 1999, respectively. The remaining container
fleet is off-lease and is being stored primarily at a large number of storage
depots. At December 31, 2001, the Partnership's off-lease containers (in units)
were located in the following locations:
America 2,184
Europe 1,771
Asia 6,527
------
Total off-lease containers 10,482
======
In addition to utilization, rental income is affected by daily rental rates,
which have decreased slightly between the periods, as discussed below.
The following is a comparative analysis of the results of operations for the
years ended December 31, 2001, 2000 and 1999.
The Partnership's income from operations for the years ended December 31, 2001
and 2000 was $37 and $3,143, respectively, on rental income of $10,169 and
$12,584, respectively. The decrease in rental income of $2,415, or 19%, from the
year ended December 31, 2000 to the comparable period in 2001 was attributable
to a decrease in container rental income, offset by an increase in other rental
income, which is discussed below. Income from container rentals, the major
component of total revenue, decreased $2,623, or 23%, primarily due to the
decrease in the average on-hire utilization of 22% and average rental rates of
3% between the periods. The majority of the Partnership's rental income was
generated from the leasing of the Partnership's containers under master
operating leases
The Partnership's income from operations for the years ended December 31, 2000
and 1999, was $3,143 and $1,100, respectively, on rental income of $12,584 and
$12,031, respectively. The increase in rental income of $553, or 5%, from the
year ended December 31, 1999, to the comparable period in 2000 was attributable
to the increase in container rental income, offset by the decrease in other
rental income. Income from container rentals increased $968, or 9%, primarily
due to the increase in the average on-hire utilization of 8%, offset by the
decline in average rental rates of 2%.
In the fourth quarter of 2000, utilization began to decline and continued to
decline during 2001 and into the beginning of 2002. This decline was due to
lower overall demand by shipping lines for leased containers, which is primarily
a result of the worldwide economic slowdown. Two other factors are currently
reducing the demand for leased containers. Shipping lines have added larger
vessels to their fleets, which combined with lower cargo volume growth, has made
it easier for them to use otherwise empty vessel space to reposition their own
containers back to high demand locations. Additionally, in anticipation of the
delivery of these new, larger vessels, many shipping lines placed large orders
for new containers in 2000 and 2001, thus temporarily reducing their need to
lease containers. These orders for additional containers are part of a general
increase in vessel capacity for the shipping lines. This increase in vessel
capacity amounted to 12% in 2001. An additional increase in vessel capacity of
approximately 12% is expected in 2002, because the shipping lines placed orders
for additional ships before recognizing the slowdown in world trade. To the
extent that this increased vessel capacity remains underutilized, shipping lines
may seek to cut costs in order to sustain profits or reduce losses, which may
put further downward pressure on demand for containers.
As a result of the lower demand, the trade imbalance between Asia and North
America and Asia and Europe has eased slightly. Combined with the excess vessel
capacity, these factors have made it easier, although not necessarily less
expensive, to reposition containers. During the year ended December 31, 2001,
the Partnership was able to reposition newer containers from low demand
locations in North America and Europe to historically higher demand locations in
Asia. As a consequence, the build-up of containers in North America and Europe,
which persisted over the past several years, has eased slightly. For the number
of off-lease containers located in the lower demand locations of America and
Europe, see chart above.
Nevertheless, the Partnership continues to sell (rather than reposition) some
containers located in low demand locations, but primarily only those containers
that were damaged. The decision to sell containers is based on the current
expectation that the economic benefit of selling these containers is greater
than the estimated economic benefit of continuing to own these containers.
Current market conditions continue to cause a decline in the economic value of
used containers. The average sales price for containers sold by the Partnership
as well as other Partnerships managed by the General Partners has decreased.
Additionally, other Partnerships managed by the General Partners have recorded
write-downs and losses on certain older containers. Many of these containers
have been located in low demand locations. There have been no such losses or
write-downs recorded by the Partnership primarily due to the young age of the
Partnership's container fleet. Sales by the Partnership in these low demand
locations have been generally limited to damaged containers. However, as the
container fleet ages, the Partnership may incur losses and/or write-downs on the
sale of its older containers located in low demand locations, if existing market
conditions continue. Should the decline in economic value of continuing to own
such containers turn out to be permanent, the Partnership may be required to
increase its depreciation rate or write-down the value of some or all of its
container rental equipment.
Despite the decline in demand for leased containers discussed above and the
decline in new container purchase prices, rental rates were comparable during
these periods. Until such time as the worldwide economies improve, particularly
those of the United States and Europe, and cargo volumes increase to the point
where this year's 12% increase in worldwide vessel capacity is absorbed, there
may be no significant improvements in utilization or rental rates.
Therefore, the General Partners do not foresee material changes in existing
market conditions for the near term. Should there be a worldwide recession,
demand for leased containers could decline further and result in a decline in
lease rates and further declines in utilization and container sale prices,
adversely affecting the Partnership's operating results.
Other rental income consists of other lease-related items, primarily income from
charges to lessees for dropping off containers in surplus locations less credits
granted to lessees for leasing containers from surplus locations (location
income), income from charges to lessees for handling related to leasing and
returning containers (handling income) and income from charges to lessees for a
Damage Protection Plan (DPP). For the year ended December 31, 2001, the total of
these other rental income items was $1,231, an increase of $208 from the
equivalent period in 2000. The increase in other rental income was primarily due
to the increase in location income of $226. Location income increased primarily
due to (i) an increase in charges to lessees for dropping off containers in
certain locations; and (ii) the decline in credits granted to lessees for
picking up containers from surplus locations as there were fewer lease-out
opportunities for which credits could be offered.
For the year ended December 31, 2000, the total of these other rental income
items was $1,023, a decrease of $415 from the equivalent period in 1999. The
decrease was primarily due to the declines in location and DPP income of $186
and $183, respectively. The decline in location income was due to a decrease in
charges to lessees for dropping off containers in certain locations and an
increase in credits granted to lessees for picking up containers from certain
locations. The decline in DPP income was due to a decrease in the average DPP
price charged per container and a decrease in the number of containers covered
under DPP.
Direct container expenses increased $832, or 29%, from the year ended December
31, 2000 to the equivalent period in 2001, primarily due to increases in storage
expenses of $963, partially offset by a decrease in handling expense of $66.
Storage expense increased primarily due to the decrease in average utilization
noted above. Handling expense decreased due to a decline in the average handling
charge per container and a decline in container movement during the year ended
December 31, 2001 compared to the equivalent period in 2000.
Direct container expenses decreased $1,058, or 27%, from the year ended December
31, 1999, to the same period in 2000. The decrease was primarily due to the
declines in storage, DPP and repositioning expenses of $438, $323 and $196.
Storage expense declined due to the improvement in utilization noted above and a
lower average storage cost per container. DPP expense declined due to a decrease
in the average repair cost per container and a decrease in the number of
containers covered under DPP. Repositioning expense decreased due to the decline
in the number of containers repositioned, offset by an increase in the average
cost of repositioning containers due to the high demand for limited vessel
capacity.
Bad debt (benefit) expense was ($5), ($143) and $164 for the years ended
December 31, 2001, 2000 and 1999, respectively. The fluctuations in bad debt
benefit/expense reflect the required adjustment to the bad debt reserve and are
based on management's then current estimates of the portion of accounts
receivable that may not be collected, and which will not be covered by
insurance. These estimates are based primarily on management's current
assessment of the financial condition of the Partnership's lessees and their
ability to make their required payments. The benefits recorded during the years
ended December 31, 2001 and 2000 reflect lower reserve requirements from the
previous year and the expense recorded during the year ended December 31, 1999
reflects a greater reserve requirement from the previous year.
Depreciation expense was comparable at $4,793, $4,738 and $4,728 for the years
ended December 31, 2001, 2000 and 1999, respectively.
New container prices steadily declined from 1995 through 1999. Although
container prices increased in 2000, these prices declined again in 2001. As a
result the cost of new containers purchased in recent years is significantly
less than the average cost of containers purchased in prior years. The
Partnership evaluated the recoverability of the recorded amount of container
rental equipment for containers to be held for continued use as well as for
containers identified for sale in the ordinary course of business. Based on this
evaluation, the Partnership determined that reductions to the carrying value of
these containers was not required during the years ended December 31, 2001, 2000
and 1999.
The Partnership will continue to evaluate the recoverability of recorded amounts
of container rental equipment and cautions that a write-down of container rental
equipment and/or an increase in its depreciation rate may be required in future
periods for some or all of its container rental equipment.
Management fees to affiliates decreased $200 or 18%, from the year ended
December 31, 2000 to the comparable period in 2001, due to decreases in both
equipment and incentive management fees of $162 and $38, respectively. Equipment
management fees decreased due to the decline in rental income, upon which
equipment management fees are primarily based. These fees were approximately 7%
of rental income for both periods. Incentive management fees, which are based on
the Partnership's limited and general partner distributions made from cash from
operations and partners' capital decreased primarily due to a decrease in the
limited partner distribution percentage from 7% to 5% of initial partners'
capital in July 2001.
Management fees to affiliates increased $26 or 2%, from the year ended December
31, 1999, to the comparable period in 2000, due to the increase in equipment
management fees of $32, offset by the decrease in incentive management fees of
$6. Equipment management fees increased due to the increase in rental income and
were approximately 7% of rental income for both periods. Incentive management
fees decreased due to the decrease in the limited partner distribution
percentage from 8% to 7% of partners' capital in March 1999.
General and administrative costs to affiliates decreased $91 or 15%, from the
year ended December 31, 2000 to the comparable period in 2001, primarily due to
a decrease in the allocation of overhead costs from TEM, as the Partnership
represented a smaller portion of the total fleet managed by TEM. General and
administrative costs to affiliates were comparable at $627 and $628 for the
years ended December 31, 2000 and 1999, respectively.
The Partnership Agreement provides for the ongoing payment to the General
Partners of the management fees and the reimbursement of the expenses discussed
above. Since these fees and expenses are established by the Agreement, they
cannot be considered the result of arms' length negotiations with third parties.
The Partnership Agreement was formulated at the Partnership's inception and was
part of the terms upon which the Partnership solicited investments from its
limited partners. The business purpose of paying the General Partners these fees
is to compensate the General Partners for the services they render to the
Partnership. Reimbursement for expenses is made to offset some of the costs
incurred by the General Partners in managing the Partnership and its container
fleet. More details about these fees and expenses are included in footnote 2 to
the Financial Statements.
Loss on sale of containers decreased $40 and $102 from the years ended December
31, 2000 to 2001 and December 31, 1999 to 2000, respectively. These decreases
were primarily due to the Partnership selling fewer damaged containers in lower
demand locations.
Net earnings per limited partnership unit decreased from $0.72 to $0.01 from the
year ended December 31, 2000 to the same period in 2001, respectively,
reflecting the decrease in net earnings allocated to limited partners from
$3,215 to $56, respectively. Net earnings per limited partnership unit increased
from $0.25 to $0.72 from the year ended December 31, 1999, to the same period in
2000, reflecting the increase in net earnings allocated to limited partners from
$1,109 to $3,215, respectively. The allocation of net earnings for the years
ended December 31, 2001, 2000 and 1999, included a special allocation of gross
income of $51, $30 and $51, respectively, to the General Partners in accordance
with the Partnership Agreement.
Critical Accounting Policies and Estimates
The Partnership's discussion and analysis of its financial condition and results
of operations are based upon the Partnership's financial statements, which have
been prepared in accordance with accounting principles generally accepted in the
United States of America. Certain estimates and assumptions were made by the
Partnership's management that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. The Partnership's management evaluates its estimates on an
on-going basis, including those related to the container rental equipment,
accounts receivable and accruals.
These estimates are based on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments regarding the carrying
values of assets and liabilities. Actual results could differ from those
estimates under different assumptions or conditions.
The Partnership's management believes the following critical accounting policies
affect its more significant judgments and estimates used in the preparation of
its financial statements.
The Partnership maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its lessees to make required payments. These
allowances are based on management's current assessment of the financial
condition of the Partnership's lessees and their ability to make their required
payments. If the financial condition of the Partnership's lessees were to
deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required, which would adversely affect the
Partnership's operating results.
The Partnership depreciates its container rental equipment based on certain
estimates related to the container's useful life and salvage value. These
estimates are based upon assumptions about future demand for leased containers
and the estimated sales price at the end of the container's useful life. If
these estimates were subsequently revised based on permanent changes in the
container leasing market, the Partnership would revise its depreciation policy,
which could adversely affect the Partnership's operating results.
Additionally, the recoverability of the recorded amounts of containers is
evaluated to ensure that the recorded amount does not exceed the estimated fair
value of the containers. If it is determined that the recorded amount exceeds
the estimated fair value, the Partnership writes down the value of those
containers. In determining the estimated fair value, assumptions are made
regarding future demand and market conditions for leased containers as well as
for used containers and the sales prices for used containers. If actual market
conditions are less favorable than those projected or if actual sales prices are
lower than those estimated by the Partnership, additional write-downs may be
required. Any additional write-downs would adversely affect the Partnership's
operating results.
Accounting Pronouncement
In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 144, "Accounting for Impairment or
Disposal of Long-Lived Assets". SFAS No. 144 supercedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets to be Disposed of", and
elements of Accounting Principles Board Opinion 30, "Reporting the Results of
Operations - Reporting the Effects on Disposal of a Segment of a Business and
Extraordinary, Unusual or Infrequently Occurring Events and Transactions."
SFAS No. 144 establishes a single-accounting model for long-lived assets to be
disposed of while maintaining many of the provisions relating to impairment
testing and valuation. The Statement will be effective on January 1, 2002 and
the Partnership is currently assessing the impact adoption will have on the
financial condition and operating results of the Partnership.
Risk Factors and Forward Looking Statements
Although substantially all of the Partnership's income from operations is
derived from assets employed in foreign operations, virtually all of this income
is denominated in United States dollars. The Partnership's customers are
international shipping lines, which transport goods on international trade
routes. The domicile of the lessee is not indicative of where the lessee is
transporting the containers. The Partnership's business risk in its foreign
operations lies with the creditworthiness of the lessees, and the Partnership's
ability to keep its containers under lease, rather than the geographic location
of the containers or the domicile of the lessees. The containers are generally
operated on the international high seas rather than on domestic waterways. The
containers are subject to the risk of war or other political, economic or social
occurrence where the containers are used, which may result in the loss of
containers, which, in turn, may have a material impact on the Partnership's
results of operations and financial condition.
Other risks of the Partnership's leasing operations include competition, the
cost of repositioning containers after they come off-lease, the risk of an
uninsured loss, including bad debts, increases in maintenance expenses or other
costs of operating the containers, and the effect of world trade, industry
trends and/or general business and economic cycles on the Partnership's
operations. See "Risk Factors" in the Partnership's Prospectus, as supplemented,
for additional information on risks of the Partnership's business. See "Critical
Accounting Policies and Estimates" above for information on the Partnership's
critical accounting policies and how changes in those estimates could adversely
affect the Partnership's results of operations.
The foregoing includes forward-looking statements and predictions about possible
or future events, results of operations and financial condition. These
statements and predictions may prove to be inaccurate, because of the
assumptions made by the Partnership or the General Partners or the actual
development of future events. No assurance can be given that any of these
forward-looking statements or predictions will ultimately prove to be correct or
even substantially correct. The risks and uncertainties in these forward-looking
statements include, but are not limited to, changes in demand for leased
containers, changes in global business conditions and their effect on world
trade, future modifications in the way in which the Partnership's lessees
conduct their business or of the profitability of their business, increases or
decreases in new container prices or the availability of financing therefor,
alterations in the costs of maintaining and repairing used containers, increases
in competition, changes in the Partnership's ability to maintain insurance for
its containers and its operations, the effects of political conditions on
worldwide shipping and demand for global trade or of other general business and
economic cycles on the Partnership, as well as other risks detailed herein and
from time to time in the Partnership's filings with the Securities and Exchange
Commission. The Partnership does not undertake any obligation to update
forward-looking statements.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Inapplicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Attached pages 14 to 26.
Independent Auditors' Report
----------------------------
The Partners
Textainer Equipment Income Fund V, L.P.:
We have audited the accompanying balance sheets of Textainer Equipment Income
Fund V, L.P. (a California limited partnership) as of December 31, 2001 and
2000, the related statements of earnings, partners' capital and cash flows for
each of the years in the three-year period ended December 31, 2001. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Textainer Equipment Income Fund
V, L.P. as of December 31, 2001 and 2000, and the results of its operations, its
partners' capital and its cash flows for each of the years in the three-year
period ended December 31, 2001 in conformity with accounting principles
generally accepted in the United States of America.
/s/ KPMG LLP
San Francisco, California
February 11, 2002
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Balance Sheets
December 31, 2001 and 2000
(Amounts in thousands)
- -----------------------------------------------------------------------------------------------------------------
2001 2000
--------------- --------------
Assets
Container rental equipment, net of accumulated
depreciation of $31,700 (2000: $27,222) $ 48,576 $ 52,557
Cash 1,038 1,962
Accounts receivable, net of allowance
for doubtful accounts of $154 (2000: $205) 1,939 2,594
Due from affiliates, net (note 2) 156 514
Prepaid expenses 12 11
--------------- --------------
$ 51,721 $ 57,638
=============== ==============
Liabilities and Partners' Capital
Liabilities:
Accounts payable $ 506 $ 403
Accrued liabilities 355 322
Accrued recovery costs (note 1(k)) 222 196
Accrued damage protection plan costs (note 1(l)) 203 396
Container purchases payable - 363
Deferred quarterly distributions (note 1(g)) 54 80
--------------- --------------
Total liabilities 1,340 1,760
--------------- --------------
Partners' capital:
General partners 29 35
Limited partners 50,352 55,843
--------------- --------------
Total partners' capital 50,381 55,878
--------------- --------------
$ 51,721 $ 57,638
=============== ==============
See accompanying notes to financial statements
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Statements of Earnings
Years ended December 31, 2001, 2000 and 1999
(Amounts in thousands except for unit and per unit amounts)
- -------------------------------------------------------------------------------------------------------------------------
2001 2000 1999
---------------- ---------------- ----------------
Rental income $ 10,169 $ 12,584 $ 12,031
---------------- ---------------- ----------------
Costs and expenses:
Direct container expenses 3,700 2,868 3,926
Bad debt (benefit) expense (5) (143) 164
Depreciation (note 1(e)) 4,793 4,738 4,728
Professional fees 32 64 76
Management fees to affiliates (note 2) 935 1,135 1,109
General and administrative costs to affiliates (note 2) 536 627 628
Other general and administrative costs 131 102 148
Loss on sale of containers 10 50 152
---------------- ---------------- ----------------
10,132 9,441 10,931
---------------- ---------------- ----------------
Income from operations 37 3,143 1,100
---------------- ---------------- ----------------
Other income:
Interest income 71 135 71
---------------- ---------------- ---------------
71 135 71
---------------- ---------------- ----------------
Net earnings $ 108 $ 3,278 $ 1,171
================ ================ ================
Allocation of net earnings (note 1(g)):
General partners $ 52 $ 63 $ 62
Limited partners 56 3,215 1,109
---------------- ---------------- ----------------
$ 108 $ 3,278 $ 1,171
================ ================ ================
Limited partners' per unit share of net earnings $ 0.01 $ 0.72 $ 0.25
================ ================ ================
Limited partners' per unit share of distributions $ 1.23 $ 1.40 $ 1.45
================ ================ ================
Weighted average number of limited
partnership units outstanding (note 1(m)) 4,452,143 4,454,893 4,454,893
================ ================ ================
See accompanying notes to financial statements
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Statements of Partners' Capital
Years ended December 31, 2001, 2000 and 1999
(Amounts in thousands)
- -----------------------------------------------------------------------------------------------------------------------
Partners' Capital
----------------------------------------------------------
General Limited Total
---------------- ----------------- -----------------
Balances at December 31, 1998 $ 44 $ 64,215 $ 64,259
Distributions (68) (6,459) (6,527)
Net earnings 62 1,109 1,171
---------------- ----------------- -----------------
Balances at December 31, 1999 38 58,865 58,903
---------------- ----------------- -----------------
Distributions (66) (6,237) (6,303)
Net earnings 63 3,215 3,278
---------------- ----------------- -----------------
Balances at December 31, 2000 35 55,843 55,878
---------------- ----------------- -----------------
Distributions (58) (5,492) (5,550)
Redemptions (note 1(n)) - (55) (55)
Net earnings 52 56 108
---------------- ----------------- -----------------
Balances at December 31, 2001 $ 29 $ 50,352 $ 50,381
================ ================= =================
See accompanying notes to financial statements
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Statements of Cash Flows
Years ended December 31, 2001, 2000 and 1999
(Amounts in thousands)
- --------------------------------------------------------------------------------------------------------------------------------
2001 2000 1999
-------------- -------------- --------------
Cash flows from operating activities:
Net earnings $ 108 $ 3,278 $ 1,171
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation 4,793 4,738 4,728
(Decrease) increase in allowance for doubtful accounts (51) (276) 128
Write-off of organization costs - - 35
Loss on sale of containers 10 50 152
Decrease (increase) in assets:
Accounts receivable 734 610 (94)
Due from affiliates, net 313 68 (101)
Prepaid expenses (1) 2 6
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities 136 188 29
Accrued recovery costs 26 24 40
Accrued damage protection plan costs (193) (135) 134
-------------- -------------- --------------
Net cash provided by operating activities 5,875 8,547 6,228
-------------- -------------- --------------
Cash flows from investing activities:
Proceeds from sale of containers 503 506 720
Container purchases (1,670) (2,192) (12)
-------------- -------------- --------------
Net cash (used in) provided by investing activities (1,167) (1,686) 708
-------------- -------------- --------------
Cash flows from financing activities:
Redemptions of limited partnership units (55) - -
Distributions to partners (5,577) (6,304) (6,540)
-------------- -------------- --------------
Net cash used in financing activities (5,632) (6,304) (6,540)
-------------- -------------- --------------
Net (decrease) increase in cash (924) 557 396
Cash at beginning of period 1,962 1,405 1,009
-------------- -------------- --------------
Cash at end of period $ (1,038) $ 1,962 $ 1,405
============== ============== ==============
See accompanying notes to financial statements
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Statements of Cash Flows - Continued
Years ended December 31, 2001, 2000 and 1999
(Amounts in thousands)
- --------------------------------------------------------------------------------
Supplemental Disclosures:
Supplemental schedule of non-cash investing and financing activities:
The following table summarizes the amounts of container purchases, distributions
to partners and proceeds from sale of containers which had not been paid or
received by the Partnership as of December 31, 2001, 2000, 1999, and 1998,
resulting in differences in amounts recorded and amounts of cash disbursed or
received by the Partnership, as shown in the Statements of Cash Flows.
2001 2000 1999 1998
---- ---- ---- ----
Container purchases included in:
Due to affiliates..................................... $24 $ - $ - $ -
Container purchases payable........................... - 363 - -
Distributions to partners included in:
Due to affiliates..................................... 5 6 6 6
Deferred quarterly distributions...................... 54 80 81 94
Proceeds from sale of containers included in:
Due from affiliates................................... 81 103 86 167
The following table summarizes the amounts of container purchases, distributions
to partners and proceeds from sale of containers recorded by the Partnership and
the amounts paid or received as shown on the Statements of Cash Flows for the
years ended December 31, 2001, 2000 and 1999.
2001 2000 1999
---- ---- ----
Container purchases recorded......................................... $1,331 $2,555 $ 12
Container purchases paid............................................. 1,670 2,192 12
Distributions to partners declared................................... 5,550 6,303 6,527
Distributions to partners paid....................................... 5,577 6,304 6,540
Proceeds from sale of containers recorded............................ 481 523 639
Proceeds from sale of containers received............................ 503 506 720
The Partnership has entered into direct finance leases, resulting in the
transfer of containers from container rental equipment to accounts receivable.
The carrying values of containers transferred during the years ended December
31, 2001, 2000 and 1999 were $31, $128 and $159, respectively.
See accompanying notes to financial statements
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Notes to Financial Statements
Years ended December 31, 2001, 2000 and 1999
(Amounts in thousands except for unit and per unit amounts)
- --------------------------------------------------------------------------------
Note 1. Summary of Significant Accounting Policies
(a) Nature of Operations
Textainer Equipment Income Fund V, L.P. (TEIF V or the Partnership), a
California limited partnership, with a maximum life of 20 years, was formed
on July 15, 1993. The Partnership was formed to engage in the business of
owning, leasing and selling both new and used equipment related to the
international containerized cargo shipping industry, including, but not
limited to, containers, trailers and other container-related equipment.
TEIF V offered units representing limited partnership interests (Units) to
the public from May 1, 1994 until April 29, 1996, the close of the offering
period, when a total of 4,465,263 Units had been purchased for a total of
$89,305.
Textainer Capital Corporation (TCC) is the managing general partner of the
Partnership. Textainer Equipment Management Limited (TEM) and Textainer
Limited (TL) are associate general partners of the Partnership. The
managing general partner and the associate general partners are
collectively referred to as the General Partners and are commonly owned by
Textainer Group Holdings Limited (TGH). The General Partners also act in
this capacity for other limited partnerships. The General Partners manage
and control the affairs of the Partnership.
(b) Basis of Accounting
The Partnership utilizes the accrual method of accounting. Revenue is
recorded when earned according to the terms of the container rental
contracts. These contracts are classified as operating leases or direct
finance leases if they so qualify under Statement of Financial Accounting
Standards No. 13: "Accounting for Leases".
(c) Critical Accounting Policies and Estimates
Certain estimates and assumptions were made by the Partnership's management
that affect the reported amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. The Partnership's management evaluates its estimates on
an on-going basis, including those related to the container rental
equipment, accounts receivable and accruals.
These estimates are based on historical experience and on various other
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments regarding the carrying
values of assets and liabilities. Actual results could differ from those
estimates under different assumptions or conditions.
The Partnership's management believes the following critical accounting
policies affect its more significant judgments and estimates used in the
preparation of its financial statements.
The Partnership maintains allowances for doubtful accounts for estimated
losses resulting from the inability of its lessees to make required
payments. These allowances are based on management's current assessment of
the financial condition of the Partnership's lessees and their ability to
make their required payments. If the financial condition of the
Partnership's lessees were to deteriorate, resulting in an impairment of
their ability to make payments, additional allowances may be required.
The Partnership depreciates its container rental equipment based on certain
estimates related to the container's useful life and salvage value. These
estimates are based upon assumptions about future demand for leased
containers and the estimated sales price at the end of the container's
useful life. If these estimates were subsequently revised based on
permanent changes in the container leasing market, the Partnership would
revise its depreciation policy.
Additionally, the recoverability of the recorded amounts of containers is
evaluated to ensure that the recorded amount does not exceed the estimated
fair value of the containers. If it is determined that the recorded amount
exceeds the estimated fair value, the Partnership writes down the value of
those containers. In determining the estimated fair value, assumptions are
made regarding future demand and market conditions for leased containers as
well as for used containers and the sales prices for used containers. If
actual market conditions are less favorable than those projected or if
actual sales prices are lower than those estimated by the Partnership,
additional write-downs may be required.
(d) Fair Value of Financial Instruments
In accordance with Statement of Financial Accounting Standards No. 107,
"Disclosures about Fair Value of Financial Instruments," the Partnership
calculates the fair value of financial instruments and includes this
additional information in the notes to the financial statements when the
fair value is different than the book value of those financial instruments.
At December 31, 2001 and 2000, the fair value of the Partnership's
financial instruments (cash, accounts receivable and current liabilities)
approximates the related book value of such instruments.
(e) Container Rental Equipment
Container rental equipment is recorded at the cost of the assets purchased,
which includes acquisition fees, less accumulated depreciation charged.
Depreciation of new containers is computed using the straight-line method
over an estimated useful life of 12 years to a 28% salvage value. Used
containers are depreciated based upon their estimated remaining useful life
at the date of acquisition (from 2 to 11 years). When assets are retired or
otherwise disposed of, the cost and related accumulated depreciation are
removed from the equipment accounts and any resulting gain or loss is
recognized in income for the period.
In accordance with Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets
to be Disposed of" (SFAS 121), the Partnership periodically compares the
carrying value of its containers to expected future cash flows for the
purpose of assessing the recoverability of the recorded amounts. If the
carrying value exceeds expected future cash flows, the assets are written
down to estimated fair value. In addition, containers identified for
disposal are recorded at the lower of carrying amount or fair value less
cost to sell.
New container prices steadily declined from 1995 through 1999. Although
container prices increased in 2000, these prices declined again in 2001. As
a result the cost of new containers purchased in recent years is
significantly less than the average cost of containers purchased in prior
years. The Partnership evaluated the recoverability of the recorded amount
of container rental equipment for containers to be held for continued use
as well as for containers identified for sale in the ordinary course of
business. Based on this evaluation, the Partnership determined that
reductions to the carrying value of these containers was not required
during the years ended December 31, 2001, 2000 and 1999.
The Partnership will continue to evaluate the recoverability of recorded
amounts of container rental equipment and cautions that a write-down of
container rental equipment and/or an increase in its depreciation rate may
be required in future periods for some or all of its container rental
equipment.
In August 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 144, "Accounting for
Impairment or Disposal of Long-Lived Assets". SFAS No. 144 supercedes SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets to be Disposed
of", and elements of Accounting Principles Board Opinion 30, "Reporting the
Results of Operations - Reporting the Effects on Disposal of a Segment of a
Business and Extraordinary, Unusual or Infrequently Occurring Events and
Transactions."
SFAS No. 144 establishes a single-accounting model for long-lived assets to
be disposed of while maintaining many of the provisions relating to
impairment testing and valuation. The Statement will be effective on
January 1, 2002 and the Partnership is currently assessing the impact
adoption will have on the financial condition and operating results of the
Partnership.
(f) Nature of Income from Operations
Although substantially all of the Partnership's income from operations is
derived from assets employed in foreign operations, virtually all of this
income is denominated in United States dollars. The Partnership's customers
are international shipping lines that transport goods on international
trade routes. The domicile of the lessee is not indicative of where the
lessee is transporting the containers. The Partnership's business risk in
its foreign operations lies with the creditworthiness of the lessees rather
than the geographic location of the containers or the domicile of the
lessees.
No single lessee accounted for more than 10% of the Partnership's revenues
for the years ended December 31, 2001, 2000 and 1999.
(g) Allocation of Net Earnings and Partnership Distributions
In accordance with the Partnership Agreement, sections 3.08 through 3.12,
net earnings or losses and distributions are generally allocated 1% to the
General Partners and 99% to the Limited Partners. If the allocation of
distributions exceeds the allocation of net earnings and creates a deficit
in a General Partner's capital account, the Partnership Agreement provides
for a special allocation of gross income equal to the amount of the deficit
to be made to the General Partners.
Actual cash distributions to the Limited Partners differ from the allocated
net earnings as presented in these financial statements because cash
distributions are based on cash available for distribution. Cash
distributions are paid to the general and limited partners on a monthly
basis in accordance with the provisions of the Partnership Agreement. Some
limited partners have elected to have their distributions paid quarterly.
The Partnership has recorded deferred distributions of $54 and $80 at
December 31, 2001 and 2000, respectively.
(h) Income Taxes
The Partnership is not subject to income taxes. Accordingly, no provision
for income taxes has been made. The Partnership files federal and state
information returns only. Taxable income or loss is reportable by the
individual partners.
(i) Organization Costs
Organization costs which resulted from the formation of the Partnership
were capitalized and were to be amortized on a straight-line basis over
five years. During 1999, the Partnership adopted Statement of Position
(SOP) 98-5 "Reporting on Costs of Start-up Activities", which prescribes
that organization costs be expensed. In accordance with SOP 98-5, the
Partnership wrote-off $35 of unamortized organization costs during the year
ended December 31, 1999.
(j) Acquisition Fees
In accordance with the Partnership Agreement, acquisition fees equal to 5%
of the container purchase price were paid to TEM. These fees are
capitalized as part of the cost of the containers.
(k) Recovery Costs
The Partnership accrues an estimate for recovery costs as a result of
defaults under its leases that it expects to incur, which are in excess of
estimated insurance proceeds. At December 31, 2001 and 2000, the amounts
accrued were $222 and $196, respectively.
(l) Damage Protection Plan
The Partnership offers a Damage Protection Plan (DPP) to lessees of its
containers. Under the terms of DPP, the Partnership earns additional
revenues on a daily basis and, in return, has agreed to bear certain repair
costs. It is the Partnership's policy to recognize revenue when earned and
provide a reserve sufficient to cover the estimated future repair costs.
DPP expenses are included in direct container expenses in the Statements of
Earnings and the related reserve at December 31, 2001 and 2000 was $203 and
$396, respectively.
(m) Limited Partners' Per Unit Share of Net Earnings and Distributions
Limited partners' per unit share of both net earnings and distributions
were computed using the weighted average number of units outstanding which
was 4,452,143, 4,454,893 and 4,454,893 during each of the years ended
December 31, 2001, 2000 and 1999.
(n) Redemptions
The following redemption offerings were consummated by the Partnership
during the years ended December 31, 2001:
Units Average
Redeemed Redemption Price Amount Paid
-------- ---------------- ------------
Total Partnership redemptions as of
December 31, 1998..................... 8,451 $ 17.97 $ 152
------ ---
Year ended December 31, 2001
3rd quarter...................... 5,500 $ 10.09 55
------ ---
Total Partnership redemptions as of
December 31, 2001..................... 13,951 $ 14.87 $ 207
====== ===
There were no redemptions during the years ended December 31, 2000 and
1999. The redemption price is fixed by formula.
Note 2. Transactions with Affiliates
As part of the operation of the Partnership, the Partnership is to pay to
the General Partners an acquisition fee, an equipment management fee, an
incentive management fee and an equipment liquidation fee. These fees are
for various services provided in connection with the administration and
management of the Partnership. The Partnership capitalized $63 and $122 of
equipment acquisition fees as part of container rental equipment costs
during the years ended December 31, 2001 and 2000, respectively. The
Partnership did not capitalize any equipment acquisition fees during the
year ended December 31, 1999. The Partnership incurred $225, $263, and $269
of incentive management fees during each of the three years ended December
31, 2001, 2000 and 1999, respectively. No equipment liquidation fees were
incurred during these periods.
The Partnership's containers are managed by TEM. In its role as manager,
TEM has authority to acquire, hold, manage, lease, sell and dispose of the
containers. TEM holds, for the payment of direct operating expenses, a
reserve of cash that has been collected from leasing operations; such cash
is included in due from affiliates, net, at December 31, 2001 and 2000.
Subject to certain reductions, TEM receives a monthly equipment management
fee equal to 7% of gross lease revenues attributable to master operating
leases and 2% of gross lease revenues attributable to full payout net
leases. For the years ended December 31, 2001, 2000 and 1999, equipment
management fees totaled $710, $872, and $840, respectively.
Certain indirect general and administrative costs such as salaries,
employee benefits, taxes and insurance are incurred in performing
administrative services necessary to the operation of the Partnership.
These costs are incurred and paid by TEM and TCC. Total general and
administrative costs allocated to the Partnership were as follows:
2001 2000 1999
---- ---- ----
Salaries $322 $325 $349
Other 214 302 279
--- --- ---
Total general and
administrative costs $536 $627 $628
=== === ===
TEM allocates these general and administrative costs based on the ratio of
the Partnership's interest in the managed containers to the total container
fleet managed by TEM during the period. TCC allocates these costs based on
the ratio of the Partnership's containers to the total container fleet of
all limited partnerships managed by TCC. The General Partners allocated the
following general and administrative costs to the Partnership:
2001 2000 1999
---- ---- ----
TEM $469 $546 $561
TCC 67 81 67
--- --- ---
Total general and
administrative costs $536 $627 $628
=== === ===
The General Partners may acquire containers in their own name and hold
title on a temporary basis for the purpose of facilitating the acquisition
of such containers for the Partnership. The containers may then be resold
to the Partnership on an all-cash basis at a price equal to the actual
cost, as defined in the Partnership Agreement. One or more General Partners
may also arrange for the purchase of containers in its or their names, and
the Partnership may then take title to the containers by paying the seller
directly. In addition, the General Partners are entitled to an acquisition
fee for containers acquired by the Partnership under any of these
arrangements.
At December 31, 2001 and 2000, due from affiliates, net, is comprised of:
2001 2000
---- ----
Due from affiliates:
Due from TEM........................... $179 $533
--- ---
Due to affiliates:
Due to TL.............................. 3 4
Due to TCC............................. 20 15
--- ---
23 19
--- ---
Due from affiliates, net $156 $514
=== ===
These amounts receivable from and payable to affiliates were incurred in
the ordinary course of business between the Partnership and its affiliates
and represent timing differences in the accrual and remittance of expenses,
fees and distributions described above and in the accrual and remittance of
net rental revenues and container sales proceeds from TEM.
Note 3. Lease Rental Income (unaudited)
Leasing income arises principally from the renting of containers to various
international shipping lines. Revenue is recorded when earned according to
the terms of the container rental contracts. These contracts are typically
for terms of five years or less. The following is the lease mix of the
on-lease containers (in units) at December 31, 2001 and 2000:
2001 2000
---- ----
On-lease under master leases 9,262 14,139
On-lease under long-term leases 5,141 5,192
------ ------
Total on-lease containers 14,403 19,331
====== ======
Under master lease agreements, the lessee is not committed to lease a
minimum number of containers from the Partnership during the lease term and
may generally return any portion or all the containers to the Partnership
at any time, subject to certain restrictions in the lease agreement. Under
long-term lease agreements, containers are usually leased from the
Partnership for periods of between three to five years. Such leases are
generally cancelable with a penalty at the end of each twelve-month period.
Under direct finance leases, the containers are usually leased from the
Partnership for the remainder of the container's useful life with a
purchase option at the end of the lease term.
The remaining containers are off-lease and are being stored primarily at a
large number of storage depots in the following locations:
America 2,184
Europe 1,771
Asia 6,527
------
Total off-lease containers 10,482
======
Note 4. Income Taxes
During 2001, 2000 and 1999, there were temporary differences of $43,924,
$43,108, and $37,427, respectively, between the financial statement
carrying value of certain assets and liabilities and the federal income tax
basis of such assets and liabilities. The reconciliation of net income for
financial statement purposes to net loss for federal income tax purposes
for the years ended December 31, 2001, 2000, and 1999 is as follows:
2001 2000 1999
---- ---- ----
Net income per financial statements......................... $ 108 $ 3,278 $ 1,171
(Decrease) increase in provision for bad debt............... (51) (276) 128
Depreciation for federal income tax purposes in excess
of depreciation for financial statement purposes.......... (1,051) (5,834) (8,125)
Gain on sale of fixed assets for federal income tax
purposes in excess of gain/loss recognized for
financial statement purposes.............................. 479 564 662
(Decrease) increase in damage protection plan reserve....... (193) (135) 134
------ -------- --------
Net loss for federal income tax purposes.................... $ (708) $ (2,403) $ (6,030)
====== ======== ========
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Selected Quarterly Financial Data
- -------------------------------------------------------------------------------------------------------------------------
The following is a summary of selected quarterly financial data for the years ended
December 31, 2001, 2000 and 1999:
(Amounts in thousands)
2001 Quarters Ended
--------------------------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31
--------------------------------------------------------------
Rental income $ 2,834 $ 2,504 $ 2,545 $ 2,286
Income (loss) from operations $ 221 $ (85) $ (31) $ (68)
Net earnings (loss) $ 249 $ (63) $ (17) $ (61)
Limited partners' share of net earnings (loss) $ 234 $ (78) $ (28) $ (72)
Limited partners' share of distributions $ 1,559 $ 1,559 $ 1,262 $ 1,112
2000 Quarters Ended
--------------------------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31
--------------------------------------------------------------
Rental income $ 3,143 $ 3,199 $ 3,079 $ 3,163
Income from operations $ 688 $ 930 $ 783 $ 742
Net earnings $ 714 $ 966 $ 821 $ 777
Limited partners' share of net earnings $ 700 $ 949 $ 805 $ 761
- -
Limited partners' share of distributions $ 1,559 $ 1,559 $ 1,560 $ 1,559
1999 Quarters Ended
--------------------------------------------------------------
Mar. 31 June 30 Sept. 30 Dec. 31
--------------------------------------------------------------
Rental income $ 2,921 $ 2,871 $ 3,037 $ 3,202
Income (loss) from operations $ 22 $ (108) $ 454 $ 732
Net earnings (loss) $ 38 $ (90) $ 471 $ 752
Limited partners' share of net earnings (loss) $ 20 $ (104) $ 457 $ 736
Limited partners' share of distributions $ 1,782 $ 1,559 $ 1,559 $ 1,559
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There have been none.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Registrant has no officers or directors.
As described in the Prospectus, the Registrant's three general partners are TCC,
TEM and TL. TCC is the Managing General Partner of the Partnership and TEM and
TL are Associate General Partners. The Managing General Partner and Associate
General Partners are collectively referred to as the General Partners. TCC, TEM
and TL are wholly-owned subsidiaries of Textainer Group Holdings Limited (TGH).
The General Partners act in this capacity for other limited partnerships.
TCC, as the Managing General Partner, is responsible for managing the
administration and operation of the Registrant, and for the formulation and
administration of investment policies.
TEM, an Associate General Partner, manages all aspects of the operation of the
Registrant's equipment.
TL, an Associate General Partner, owns a fleet of container rental equipment,
which is managed by TEM. TL provides advice to the Partnership regarding
negotiations with financial institutions, manufacturers and equipment owners,
and regarding the terms upon which particular items of equipment are acquired.
Section 16(a) Beneficial Ownership Reporting Compliance.
- --------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the Partnership's
General Partners, policy-making officials and persons who beneficially own more
than ten percent of the Units to file reports of ownership and changes in
ownership with the Securities and Exchange Commission. Copies of these reports
must also be furnished to the Partnership.
Based solely on a review of the copies of such forms furnished to the
Partnership or on written representations that no forms were required to be
filed, the Partnership believes that with respect to its most recent fiscal year
ended December 31, 2001, all Section 16(a) filing requirements were complied
with. No member of management, or beneficial owner owned more than 10 percent of
any interest in the Partnership. None of the individuals subject to Section
16(a) failed to file or filed late any reports of transactions in the Units.
The directors and executive officers of the General Partners are as follows:
Name Age Position
- ---- --- --------
Neil I. Jowell 68 Director and Chairman of TGH, TEM, TL, TCC and TFS
John A. Maccarone 57 President, CEO and Director of TGH, TEM, TL, TCC and TFS
James E. Hoelter 62 Director of TGH, TEM, TL, TCC and TFS
Alex M. Brown 63 Director of TGH, TEM, TL, TCC and TFS
Harold J. Samson 80 Director of TGH and TL
Philip K. Brewer 45 Senior Vice President - Asset Management Group and Director of TEM and TL
Robert D. Pedersen 42 Senior Vice President - Leasing Group, Director of TEM
Ernest J. Furtado 46 Senior Vice President , CFO and Secretary of TGH, TEM, TL, TCC and TFS,
Director of TEM, TCC and TFS
Gregory W. Coan 38 Vice President and Chief Information Officer of TEM
Wolfgang Geyer 48 Regional Vice President - Europe
Mak Wing Sing 44 Regional Vice President - South Asia
Masanori Sagara 46 Regional Vice President - North Asia
Stefan Mackula 49 Vice President - Equipment Resale
Anthony C. Sowry 49 Vice President - Corporate Operations and Acquisitions
Richard G. Murphy 49 Vice President - Risk Management
Janet S. Ruggero 53 Vice President - Administration and Marketing Services
Jens W. Palludan 51 Regional Vice President - Americas and Logistics
Isam K. Kabbani 67 Director of TGH and TL
James A. C. Owens 62 Director of TGH and TL
S. Arthur Morris 68 Director of TGH, TEM and TL
Dudley R. Cottingham 50 Assistant Secretary, Vice President and Director of TGH, TEM and TL
Nadine Forsman 34 Controller of TCC and TFS
Neil I. Jowell is Director and Chairman of TGH, TEM, TL, TCC and TFS and a
member of the Investment Advisory Committee (see "Committees" below). He has
served on the Board of Trencor Ltd. since 1966 and as Chairman since 1973. He is
also a director of Mobile Industries, Ltd. (1969 to present), an affiliate of
Trencor, and a non-executive director of Forward Corporation Ltd. (1993 to
present). Trencor is a publicly traded diversified industrial group listed on
the Johannesburg Stock Exchange. Its business is the leasing, owning, managing
and financing of marine cargo containers worldwide and the manufacture and
export of containers for international markets. In South Africa, it is engaged
in manufacturing, trading and exports of general commodities. Trencor also has
an interest in Forward Corporation Ltd., a publicly traded holding company
listed on the Johannesburg Stock Exchange. It has interests in industrial and
consumer businesses operating in South Africa and abroad. Mr. Jowell became
affiliated with the General Partners and its affiliates when Trencor became,
through its beneficial ownership in two controlled companies, a major
shareholder of the Textainer Group in 1992. Mr. Jowell has over 36 years'
experience in the transportation industry. He holds an M.B.A. degree from
Columbia University and Bachelor of Commerce and L.L.B. degrees from the
University of Cape Town.
John A. Maccarone is President, CEO and Director of TGH, TEM, TL, TCC and
TFS. In this capacity he is responsible for overseeing the management of and
coordinating the activities of Textainer's worldwide fleet of marine cargo
containers and the activities of all of these corporations. Additionally, he is
Chairman of the Equipment Investment Committee, the Credit Committee and the
Investment Advisory Committee (see "Committees", below). Mr. Maccarone was
instrumental in co-founding Intermodal Equipment Associates (IEA), a marine
container leasing company based in San Francisco, and held a variety of
executive positions with IEA from 1979 until 1987, when he joined the Textainer
Group. Mr. Maccarone was previously a Director of Marketing for Trans Ocean
Leasing Corporation in Hong Kong with responsibility for all leasing activities
in Southeast Asia. From 1969 to 1977, Mr. Maccarone was a marketing
representative for IBM Corporation. He holds a Bachelor of Science degree in
Engineering Management from Boston University and an M.B.A. from Loyola
University of Chicago.
James E. Hoelter is a director of TGH, TEM, TL, TCC and TFS. In addition,
Mr. Hoelter is a member of the Equipment Investment Committee and the Investment
Advisory Committee (see "Committees", below). Mr. Hoelter was the President and
Chief Executive Officer of TGH and TL from 1993 to 1998 and currently serves as
a consultant to Trencor (1999 to present). Prior to joining the Textainer Group
in 1987, Mr. Hoelter was president of IEA. Mr. Hoelter co-founded IEA in 1978
with Mr. Maccarone and was president from inception until 1987. From 1976 to
1978, Mr. Hoelter was vice president for Trans Ocean Ltd., San Francisco, a
marine container leasing company, where he was responsible for North America.
From 1971 to 1976, he worked for Itel Corporation, San Francisco, where he was
director of financial leasing for the container division. Mr. Hoelter received
his B.B.A. in finance from the University of Wisconsin, where he is an emeritus
member of its Business School's Dean's Advisory Board, and his M.B.A. from the
Harvard Graduate School of Business Administration.
Alex M. Brown is a director of TGH, TEM, TL, TCC and TFS. Additionally, he
is a member of the Equipment Investment Committee and the Investment Advisory
Committee (see "Committees", below). Among other directorships, Mr. Brown is a
director of Trencor Ltd. (1996 to present). Mr. Brown became affiliated with the
Textainer Group in April 1986. From 1987 until 1993, he was President and Chief
Executive Officer of Textainer, Inc. and the Chairman of the Textainer Group.
Mr. Brown was the managing director of Cross County Leasing in England from 1984
until it was acquired by Textainer in 1986. From 1993 to 1997, Mr. Brown was
Chief Executive Officer of AAF, a company affiliated with Trencor Ltd. Mr. Brown
was also Chairman of WACO International Corporation, based in Cleveland, Ohio
until 1997.
Harold J. Samson is a director of TGH and TL and has served as such since
the Textainer Group's reorganization and formation of these companies in 1993.
He is also a member of the Investment Advisory Committee (see "Committees",
below). Mr. Samson served as a consultant to various securities firms from 1981
to 1989. From 1974 to 1981 he was Executive Vice President of Foster & Marshall,
Inc., a New York Stock Exchange member firm based in Seattle. Mr. Samson was a
director of IEA from 1979 to 1981. From 1957 to 1984 he served as Chief
Financial Officer in several New York Stock Exchange member firms. Mr. Samson
holds a B.S. in Business Administration from the University of California,
Berkeley and is a California Certified Public Accountant.
Philip K. Brewer is Senior Vice President - Asset Management Group and
director of TEM and TL. He was President of TCC and TFS from January 1, 1998 to
December 31, 1998 until his appointment as Senior Vice President - Asset
Management Group. As President of TCC, Mr. Brewer was responsible for overseeing
the management of, and coordinating the activities of TCC and TFS. As Senior
Vice President, he is responsible for optimizing the capital structure of and
identifying new sources of finance for Textainer, as well as overseeing the
management of and coordinating the activities of Textainer's risk management,
logistics and the resale divisions. Mr. Brewer is a member of the Equipment
Investment Committee, the Credit Committee and was a member of the Investment
Advisory Committee through December 31, 1998 (see "Committees" below). Prior to
joining Textainer in 1996, as Senior Vice President - Capital Markets for TGH
and TL, Mr. Brewer worked at Bankers Trust from 1990 to 1996, starting as a Vice
President in Corporate Finance and ending as Managing Director and Country
Manager for Indonesia; from 1989 to 1990, he was Vice President in Corporate
Finance at Jarding Fleming; from 1987 to 1989, he was Capital Markets Advisor to
the United States Agency for International Development; and from 1984 to 1987 he
was an Associate with Drexel Burnham Lambert in New York. Mr. Brewer holds an
M.B.A. in Finance from the Graduate School of Business at Columbia University,
and a B.A. in Economics and Political Science from Colgate University.
Robert D. Pedersen is Senior Vice-President - Leasing Group and a Director
of TEM, responsible for worldwide sales and marketing related activities and
operations. Mr. Pedersen is a member of the Equipment Investment Committee and
the Credit Committee (see "Committees" below). He joined Textainer in 1991 as
Regional Vice President for the Americas Region. Mr. Pedersen has extensive
experience in the industry having held a variety of positions with Klinge Cool,
a manufacturer of refrigerated container cooling units (from 1989 to 1991),
where he was worldwide sales and marketing director, XTRA, a container lessor
(from 1985 to 1988) and Maersk Line, a container shipping line (from 1978 to
1984). Mr. Pedersen is a graduate of the A.P. Moller shipping and transportation
program and the Merkonom Business School in Copenhagen, majoring in Company
Organization.
Ernest J. Furtado is Senior Vice President, CFO and Secretary of TGH, TEM,
TL, TCC and TFS and a Director of TEM, TCC and TFS, in which capacity he is
responsible for all accounting, financial management, and reporting functions
for TGH, TEM, TL, TCC and TFS. Additionally, he is a member of the Investment
Advisory Committee for which he serves as Secretary, the Equipment Investment
Committee and the Credit Committee (see "Committees", below). Prior to these
positions, he held a number of accounting and financial management positions at
Textainer, of increasing responsibility. Prior to joining Textainer in May 1991,
Mr. Furtado was Controller for Itel Instant Space and manager of accounting for
Itel Containers International Corporation, both in San Francisco, from 1984 to
1991. Mr. Furtado's earlier business affiliations include serving as audit
manager for Wells Fargo Bank and as senior accountant with John F. Forbes & Co.,
both in San Francisco. He is a Certified Public Accountant and holds a B.S. in
business administration from the University of California at Berkeley and an
M.B.A. in information systems from Golden Gate University.
Gregory W. Coan is Vice President and Chief Information Officer of TEM. In
this capacity, Mr. Coan is responsible for the worldwide information systems of
Textainer and serves on the Credit Committee (see "Committees", below). Prior to
these positions, Mr. Coan was the Director of Communications and Network
Services from 1995 to 1999, where he was responsible for Textainer's network and
hardware infrastructure. Mr. Coan holds a Bachelor of Arts degree in political
science from the University of California at Berkeley and an M.B.A. with an
emphasis in telecommunications from Golden Gate University.
Wolfgang Geyer is based in Hamburg, Germany and is Regional Vice President
- - Europe, responsible for coordinating all leasing activities in Europe, Africa
and the Middle East/Persian Gulf. Mr. Geyer joined Textainer in 1993 and was the
Marketing Director in Hamburg through July 1997. From 1991 to 1993, Mr. Geyer
most recently was the Senior Vice President for Clou Container Leasing,
responsible for its worldwide leasing activities. Mr. Geyer spent the remainder
of his leasing career, 1975 through 1991, with Itel Container, during which time
he held numerous positions in both operations and marketing within the company.
Mak Wing Sing is based in Singapore and is the Regional Vice President -
South Asia, responsible for container leasing activities in North/Central
People's Republic of China, Hong Kong, South China (PRC), Southeast Asia and
Australia/New Zealand. Mr. Mak most recently was the Regional Manager, Southeast
Asia, for Trans Ocean Leasing, working there from 1994 to 1996. From 1987 to
1994, Mr. Mak worked with Tiphook as their Regional General Manager, and with
OOCL from 1976 to 1987 in a variety of positions, most recently as their
Logistics Operations Manager.
Masanori Sagara is based in Yokohama, Japan and is the Regional Vice
President - North Asia, responsible for container leasing activities in Japan,
Korea, and Taiwan. Mr. Sagara joined Textainer in 1990 and was the company's
Marketing Director in Japan through 1996. From 1987 to 1990, he was the
Marketing Manager at IEA. Mr. Sagara's other experience in the container leasing
business includes marketing management at Genstar from 1984 to 1987 and various
container operations positions with Thoresen & Company from 1979 to 1984. Mr.
Sagara holds a Bachelor of Science degree in Economics from Aoyama Bakuin
University.
Stefan Mackula is Vice President - Equipment Resale, responsible for
coordinating the worldwide sale of equipment into secondary markets. Mr. Mackula
also served as Vice President - Marketing from 1989 to 1991 where he was
responsible for coordinating all leasing activities in Europe, Africa, and the
Middle East. Mr. Mackula joined Textainer in 1983 as Leasing Manager for the
United Kingdom. Prior to joining Textainer, Mr. Mackula held, beginning in 1972,
a variety of positions in the international container shipping industry.
Anthony C. Sowry is Vice President - Corporate Operations and Acquisitions.
He is also a member of the Equipment Investment Committee and the Credit
Committee (see "Committees", below). Mr. Sowry supervises all international
container operations and maintenance and technical functions for the fleets
under Textainer's management. In addition, he is responsible for the acquisition
of all new and used containers for the Textainer Group. He began his affiliation
with Textainer in 1982, when he served as Fleet Quality Control Manager for
Textainer Inc. until 1988. From 1980 to 1982, he was operations manager for
Trans Container Services in London; and from 1978 to 1982, he was a technical
representative for Trans Ocean Leasing, also in London. He received his B.A.
degree in business management from the London School of Business. Mr. Sowry is a
member of the Technical Committee of the International Institute of Container
Lessors and a certified container inspector.
Richard G. Murphy is Vice President - Risk Management, responsible for all
credit and risk management functions. He also supervises the administrative
aspects of equipment acquisitions. He is a member of and acts as secretary to
the Equipment Investment and Credit Committees (see "Committees", below). He
previously served as TEM's Director of Credit and Risk Management from 1989 to
1991 and as Controller from 1988 to 1989. Prior to the takeover of the
management of the Interocean Leasing Ltd. fleet by TEM in 1988, Mr. Murphy held
various positions in the accounting and financial areas with that company from
1980, acting as Chief Financial Officer from 1984 to 1988. Prior to 1980, he
held various positions with firms of public accountants in the U.K. Mr. Murphy
is an Associate of the Institute of Chartered Accountants in England and Wales
and holds a Bachelor of Commerce degree from the National University of Ireland.
Janet S. Ruggero is Vice President - Administration and Marketing Services.
Ms. Ruggero is responsible for the tracking and billing of fleets under TEM
management, including direct responsibility for ensuring that all data is input
in an accurate and timely fashion. She assists the marketing and operations
departments by providing statistical reports and analyses and serves on the
Credit Committee (see "Committees", below). Prior to joining Textainer in 1986,
Ms. Ruggero held various positions with Gelco CTI over the course of 15 years,
the last one as Director of Marketing and Administration for the North American
Regional office in New York City. She has a B.A. in education from Cumberland
College.
Jens W. Palludan is based in Hackensack, New Jersey and is the Regional
Vice President - Americas and Logistics, responsible for container leasing
activities in North/South America and for coordinating container logistics. He
joined Textainer in 1993 as Regional Vice President - Americas/Africa/Australia,
responsible for coordinating all leasing activities in North and South America,
Africa and Australia/New Zealand. Mr. Palludan spent his career from 1969
through 1992 with Maersk Line of Copenhagen, Denmark in a variety of key
management positions in both Denmark and overseas. Mr. Palludan's most recent
position at Maersk was that of General Manager, Equipment and Terminals, where
he was responsible for the entire managed fleet. Mr. Palludan holds an M.B.A.
from the Centre European D'Education Permanente, Fontainebleau, France.
Sheikh Isam K. Kabbani is a director of TGH and TL. He has served as such
since the Textainer Group's reorganization and formation of these companies in
1993. He is Chairman and principal stockholder of the IKK Group, Jeddah, Saudi
Arabia, a manufacturing and trading group which is active both in Saudi Arabia
and internationally. In 1959 Sheikh Isam Kabbani joined the Saudi Arabian
Ministry of Foreign Affairs, and in 1960 moved to the Ministry of Petroleum for
a period of ten years. During this time he was seconded to the Organization of
Petroleum Exporting Countries (OPEC). After a period as Chief Economist of OPEC,
in 1967 he became the Saudi Arabian member of OPEC's Board of Governors. In 1970
he left the Ministry of Petroleum to establish his own business, the National
Marketing Group, which has since been his principal business activity. Sheikh
Kabbani holds a B.A. degree from Swarthmore College, Pennsylvania, and an M.A.
degree in Economics and International Relations from Columbia University.
James A. C. Owens is a director of TGH and TL. Mr. Owens has been
associated with the Textainer Group since 1980. In 1983 he was appointed to the
Board of Textainer Inc., and served as President of Textainer Inc. from 1984 to
1987. From 1987 to 1998, Mr. Owens served as an alternate director on the Boards
of TI, TGH and TL and has served as director of TGH and TL since 1998. Apart
from his association with the Textainer Group, Mr. Owens has been involved in
insurance and financial brokerage companies and captive insurance companies. He
is a member of a number of Boards of Directors. Mr. Owens holds a Bachelor of
Commerce degree from the University of South Africa.
S. Arthur Morris is a director of TGH, TEM and TL. He is a founding partner
in the firm of Morris and Kempe, Chartered Accountants (1962-1977) and currently
functions as a correspondent member of a number of international accounting
firms through his firm Arthur Morris and Company (1977 to date). He is also
President and director of Continental Management Limited (1977 to date).
Continental Management Limited is a Bermuda corporation that provides corporate
representation, administration and management services and corporate and
individual trust administration services. Mr. Morris has over 30 years
experience in public accounting and serves on numerous business and charitable
organizations in the Cayman Islands and Turks and Caicos Islands. Mr. Morris
became a director of TL and TGH in 1993, and TEM in 1994.
Dudley R. Cottingham is Assistant Secretary, Vice President and a director
of TGH, TEM and TL. He is a partner with Arthur Morris and Company (1977 to
date) and a Vice President and director of Continental Management Limited (1978
to date), both in the Cayman Islands and Turks and Caicos Islands. Continental
Management Limited is a Bermuda corporation that provides corporate
representation, administration and management services and corporate and
individual trust administration services. Mr. Cottingham has over 20 years
experience in public accounting with responsibility for a variety of
international and local clients. Mr. Cottingham became a director of TL and TGH
in 1993, and TEM in 1994.
Nadine Forsman is the Controller of TCC and TFS. Additionally, she is a
member of the Investment Advisory Committee and Equipment Investment Committee
(See "Committees" below). As controller of TCC and TFS, she is responsible for
accounting, financial management and reporting functions for TCC and TFS as well
as overseeing all communications with the Limited Partners and as such,
supervises personnel in performing these functions. Prior to joining Textainer
in August 1996, Ms. Forsman was employed by KPMG LLP, holding various positions,
the most recent of which was manager, from 1990 to 1996. Ms. Forsman is a
Certified Public Accountant and holds a B.S. in Accounting and Finance from San
Francisco State University.
Committees
The Managing General Partner has established the following three committees
to facilitate decisions involving credit and organizational matters,
negotiations, documentation, management and final disposition of equipment for
the Partnership and for other programs organized by the Textainer Group:
Equipment Investment Committee. The Equipment Investment Committee reviews
the equipment leasing operations of the Partnership on a regular basis with
emphasis on matters involving equipment purchases, equipment remarketing issues,
and decisions regarding ultimate disposition of equipment. The members of the
committee are John A. Maccarone (Chairman), James E. Hoelter, Anthony C. Sowry,
Richard G. Murphy (Secretary), Alex M. Brown, Philip K. Brewer, Robert D.
Pedersen, Ernest J. Furtado and Nadine Forsman.
Credit Committee. The Credit Committee establishes credit limits for every
lessee and potential lessee of equipment and periodically reviews these limits.
In setting such limits, the Credit Committee considers such factors as customer
trade routes, country, political risk, operational history, credit references,
credit agency analyses, financial statements, and other information. The members
of the Credit Committee are John A. Maccarone (Chairman), Richard G. Murphy
(Secretary), Janet S. Ruggero, Anthony C. Sowry, Philip K. Brewer, Ernest J.
Furtado, Robert D. Pedersen and Gregory W. Coan.
Investment Advisory Committee. The Investment Advisory Committee reviews
investor program operations on at least a quarterly basis, emphasizing matters
related to cash distributions to investors, cash flow management, portfolio
management, and liquidation. The Investment Advisory Committee is organized with
a view to applying an interdisciplinary approach, involving management,
financial, legal and marketing expertise, to the analysis of investor program
operations. The members of the Investment Advisory Committee are John A.
Maccarone (Chairman), James E. Hoelter, Ernest J. Furtado (Secretary), Nadine
Forsman, Harold J. Samson, Alex M. Brown and Neil I. Jowell.
ITEM 11. EXECUTIVE COMPENSATION
The Registrant has no executive officers and does not reimburse TCC, TEM or TL
for the remuneration payable to their executive officers. For information
regarding reimbursements made by the Registrant to the General Partners, see
note 2 of the Financial Statements in Item 8.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners
There is no person or "Group" who is known to the Registrant to be the
beneficial owner of more than five percent of the outstanding units of
limited partnership interest in the Registrant.
(b) Security Ownership of Management
As of January 1, 2002:
Number
Name of Beneficial Owner Of Units % All Units
------------------------ -------- -----------
Ernest J. Furtado................. 600 0.0135%
James E. Hoelter.................. 1,370 0.0308%
----- -------
Officers and Management
as a Group....................... 1,970 0.0443%
===== =======
(c) Changes in control.
Inapplicable.
ITEM 201 (d) Securities under Equity Compensation Plans.
Inapplicable.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(Amounts in thousands)
(a) Transactions with Management and Others.
At December 31, 2001 and 2000, due from affiliates, net, is comprised
of:
2001 2000
---- ----
Due from affiliates:
Due from TEM....................... $179 $533
--- ---
Due to affiliates:
Due to TL.......................... 3 4
Due to TCC......................... 20 15
--- ---
23 19
--- ---
Due from affiliates, net $156 $514
=== ===
These amounts receivable from and payable to affiliates were incurred
in the ordinary course of business between the Partnership and its
affiliates and represent timing differences in the accrual and
remittance of expenses, fees and distributions and in the accrual and
remittance of net rental revenues and container sales proceeds from
TEM.
In addition, the Registrant paid or will pay the following amounts to
the General Partners:
Acquisition fees in connection with the purchase of containers on
behalf of the Registrant:
2001 2000 1999
---- ---- ----
TEM.................... $ 63 $ 122 $ -
== === ==
Management fees in connection with the operations of the Registrant:
2001 2000 1999
---- ---- ----
TEM.................... $935 $1,135 $1,109
=== ===== =====
Reimbursement for administrative costs in connection with the
operations of the Registrant:
2001 2000 1999
---- ---- ----
TEM.................... $ 469 $ 546 $ 561
TCC.................... 67 81 67
--- --- ---
Total.................. $ 536 $ 627 $ 628
=== === ===
The General Partners may acquire containers in their own name and hold
title on a temporary basis for the purpose of facilitating the
acquisition of such containers for the Partnership. The containers may
then be resold to the Partnership on an all-cash basis at a price
equal to the actual cost, as defined in the Partnership Agreement. One
or more General Partners may also arrange for the purchase of
containers in its or their names, and the Partnership may then take
title to the containers by paying the seller directly. In addition,
the General Partners are entitled to an acquisition fee for containers
acquired by the Partnership under any of these arrangements.
(b) Certain Business Relationships.
Inapplicable.
(c) Indebtedness of Management
Inapplicable.
(d) Transactions with Promoters
Inapplicable.
See the "Management" and "Compensation of the General Partners and Affiliates"
sections of the Registrant's Prospectus, as supplemented, and the Notes to the
Financial Statements in Item 8.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) 1. Audited financial statements of the Registrant for the year
ended December 31, 2001 are contained in Item 8 of this
Report.
2. Financial Statement Schedules.
(i) Independent Auditors' Report on Supplementary
Schedule.
(ii) Schedule II - Valuation and Qualifying Accounts.
3. Exhibits Incorporated by reference.
(i) The Registrant's Prospectus as contained in
Pre-Effective Amendment No. 3 to the Registrant's
Registration Statement (No. 33-71944), as filed with
the Commission on April 8, 1994, as supplemented
by Post Effective Amendment No. 2 as filed under
Section 8(c) of the Securities Act of 1933 on May 5,
1996 and Supplement No. 5 as filed under Rule 424(b)
of the Securities Act of 1933 on March 18, 1996.
(ii) The Registrant's limited partnership agreement,
Exhibit A to the Prospectus.
(b) During the year ended 2001, no reports on Form 8-K have been filed by
the Registrant.
Independent Auditors' Report on Supplementary Schedule
------------------------------------------------------
The Partners
Textainer Equipment Income Fund V, L.P.:
Under the date of February 11, 2002, we reported on the balance sheets of
Textainer Equipment Income Fund V, L.P. (the Partnership) as of December 31,
2001 and 2000, and the related statements of earnings, partners' capital and
cash flows for each of the years in the three-year period ended December 31,
2001, which are included in the 2001 annual report on Form 10-K. In connection
with our audit of the aforementioned financial statements, we also audited the
related financial statement schedule as listed in Item 14. This financial
statement schedule is the responsibility of the Partnership's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audits.
In our opinion, such schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
/s/ KPMG LLP
San Francisco, California
February 11, 2002
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
(a California Limited Partnership)
Schedule II - Valuation and Qualifying Accounts
(Amounts in thousands)
- -----------------------------------------------------------------------------------------------------------------
Charged Balance
Balance at to Costs at End
Beginning and of
of Period Expenses Deduction Period
---------- -------- --------- -------
For the year ended December 31, 2001:
Allowance for
doubtful accounts $ 205 $ (5) $ (46) $ 154
---- ----- ----- -----
Recovery cost reserve $ 196 $ 87 $ (61) $ 222
---- ----- ----- -----
Damage protection
plan reserve $ 396 $ 217 $ (410) $ 203
---- ----- ----- -----
For the year ended December 31, 2000:
Allowance for
doubtful accounts $ 481 $ (143) $ (133) $ 205
---- ----- ----- -----
Recovery cost reserve $ 172 $ 101 $ (77) $ 196
---- ----- ----- -----
Damage protection
plan reserve $ 531 $ 257 $ (392) $ 396
---- ----- ----- -----
For the year ended December 31, 1999:
Allowance for
doubtful accounts $ 353 $ 164 $ (36) $ 481
---- ----- ----- -----
Recovery cost reserve $ 132 $ 119 $ (79) $ 172
---- ----- ----- -----
Damage protection
plan reserve $ 397 $ 581 $ (447) $ 531
---- ----- ----- -----
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
A California Limited Partnership
By Textainer Capital Corporation
The Managing General Partner
By
Ernest J. Furtado
_________________________________
Senior Vice President
Date: March 28, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Textainer Capital
Corporation, the Managing General Partner of the Registrant, in the capacities
and on the dates indicated:
Signature Title Date
_____________________________ Senior Vice President, CFO March 28, 2002
Ernest J. Furtado (Principal Financial and
Accounting Officer),
Secretary and Director
_____________________________ President (Principal Executive March 28, 2002
John A. Maccarone Officer), and Director
_____________________________ Chairman of the Board and Director March 28, 2002
Neil I. Jowell
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
TEXTAINER EQUIPMENT INCOME FUND V, L.P.
A California Limited Partnership
By Textainer Capital Corporation
The Managing General Partner
By /s/Ernest J. Furtado
_________________________________
Ernest J. Furtado
Senior Vice President
Date: March 28, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of Textainer Capital
Corporation, the Managing General Partner of the Registrant, in the capacities
and on the dates indicated:
Signature Title Date
/s/Ernest J. Furtado
___________________________________ Senior Vice President, CFO March 28, 2002
Ernest J. Furtado (Principal Financial and
Accounting Officer),
Secretary and Director
/s/John A. Maccarone
___________________________________ President (Principal Executive March 28, 2002
John A. Maccarone Officer), and Director
/s/Neil I. Jowell
___________________________________ Chairman of the Board and Director March 28, 2002
Neil I. Jowell